How Chapter 13 Bankruptcy is Better Than Debt Consolidation

If you are thinking about debt consolidation you may also want to look at chapter 13 bankruptcy. In a chapter 13 bankruptcy you create a budget based on your expenses and income. This budget allows you to cover your living expenses, but also allows you to pay back your creditors an amount that you can afford. The premise of a chapter 13 plan is that it allows a repayment of your debt, in an amount that you can afford. This plan lasts for 3-5 years depending upon your families income and family size. The advantages of a chapter 13 plan is that it is a more effective way to reorganize your finances than debt consolidation. The statistics prove that chapter 13 bankruptcy is more effective than debt consolidation, in that a much higher percentage of people successfully complete their chapter 13 plan, than complete debt consolidation.
Chapter 13 bankruptcy can also be effective to save your house or car if you are behind on payments. Part of the plan you create allows you to pay the arrears on your house or car, as well as cover any priority tax debt, or other non dischargeable debt. Recent case law in Minnesota also indicates that you may be able to cram down your 2nd mortgage as part of the bankruptcy. In order to cram down your mortgage you will need to talk to a Minnesota bankruptcy lawyer, since the law in this area is still developing.